Osprey Funds is asking a Connecticut court to review its most recent ruling in favor of Grayscale Investments in a $2 million legal conflict over allegedly unfair trade practices involving Bitcoin investment funds.
Challenging Judge Mark Gould’s February 7 decision, which denied Osprey’s claims prior to the discovery process was finished, the ETF issuer filed a petition for reargument on February 10 Osprey argues that the Connecticut Unfair Trade Practices Act (CUTPA) exemption was improperly enlarged by the judge, therefore affecting its case adversely.
Originally claiming Grayscale and Delaware Trust Company of misleading investors on the probability of transforming the Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF), Osprey first sued them in January 2023 According to the lawsuit, Grayscale pushed the shift as inevitable even though at the time regulatory obstacles made approval doubtful.
Judge Gould decided, though, that Osprey’s assertions belonged under securities transactions, which are not covered by CUTPA. Furthermore mentioned by him were the two companies providing ticker-based Bitcoin investment products at the time of the lawsuit: Osprey and Grayscale.
The Securities and Exchange Commission (SEC) supported Grayscale’s posture when it authorized GBTC’s conversion into an ETF a year later, in January 2024. Osprey tried to settle its allegations against Grayscale for slightly under $2 million in July 2024, but Grayscale turned down the offer.
Osprey argues in its most recent lawsuit that the court misinterpreted legal differences between securities law exemption and misleading advertising. The company contends that rather than emphasizing unfair competition and deceptive advertising, the decision wrongly applied a general exception to all cases involving securities firms.
Osprey stressed that Grayscale was not directly involved in any securities transactions. Rather, their case revolves around how Grayscale’s marketing strategies unfairly shifted market share, therefore generating an unequal playing field.
Following the fall-off of a proposed merger with Bitwise, Osprey has indicated its intention to translate the Osprey Bitcoin Trust (OBTC) into a spot Bitcoin ETF.
The outcome of this court case might have substantial ramifications for competitive practices in the cryptocurrency investment market, as more businesses fight for regulatory approval of Bitcoin ETFs.
